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Fed. Chairman Bernanke

News/Business. (2013) Federal Reserve Chairman Ben Bernanke asks for the debt ceiling to be raised so the U.S. can pay its bills. New.

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  CSPAN    Fed. Chairman Bernanke    News/Business.  (2013) Federal Reserve Chairman Ben Bernanke  
   asks for the debt ceiling to be raised so the U.S. can pay...  

    January 19, 2013
    11:05 - 12:05pm EST  

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we took the strong actions to try to stabilize our financial system because we understood that if the financial system collapses, the economy is likely to collapse. we took those actions, learned from what happened in the 1930's. during the 1930's, in part because the world was still recovering from world war ii one, there was -- world war i, cooperation among central banks and governments was not very good. your audience may know about the tariff wars and all the things that happened. in a global crisis like this one, it is important to
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cooperate, according it as much as possible with policy makers around the world. -- cooperate as much as possible with policy makers around the world. on one date, five or six of the world's largest central banks' coordinated on an interest-rate cut. we of work with the central banks to make sure that they have enough dollars to lend for banks that need to use dollars in their transactions. cooperation has been very helpful in the latest episode. one less thing that occurs to me. one reason that the fed and other policymakers did not take more aggressive fundamental action to try to end the great
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depression was, they were afraid to do anything that was unorthodox. there was the gold standard, the whole variety of standard practices. given the great uncertainties , they often maintained very orthodox approach. the personnel change that in the united states was president roosevelt. -- the person that changed that in the united states was president roosevelt. an thats when you're situation, you need to consider unorthodox approaches. the fed and central banks did undertake some unorthodox policies. not all of them worked. a lot of them did.
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a process is still under way of bringing our economy back to where like to see it. >> -- we would like to see it. >> the global linkages are important in terms of prospects for u.s. growth. if you look over the medium term, where would you see a plausible scenario to generate the demand for the growth that we hope the u.s. is able to achieve? we are not eager to go back to the very high household consumption levels that were unsustainable given the challenges in europe not so clear where that growth might come from. -- europe. not so clear where that growth might come from. >> it is true that global growth
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has been slower. for a variety of reasons. one is the european situation. much of europe is in recession, following the difficult financial problems that have had. some emerging market economies have slowed. the slowdown in china was the least partly a policy goal to try to create a more sustainable and stable growth path and to try to shift the sources of demand in china from foreign buyers, exports to domestic demand. a variety of things have happened to slow overall growth. we saw in the u.s., we suffered week export numbers.
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for us, that is a loss of potential growth. a couple of challenges. the different parts of the world that are facing slowdowns, it has to address its own set of issues. in europe, some progress has been made in addressing their sovereign debt and banking issues that they have. the european central bank has taken some important steps to try to stabilize the financial markets there. they're working on improving their fiscal arrangements, both to create a longer-term sustainability in individual countries, to put up a set of agreements under which countries would be willing to work with each other on fiscal matters. they're working to develop a banking union where banking regulation would be done throughout the euro zone by the ec be or some other agency --
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ecb or other agency. that would make the european banking system less dependent on other countries. steps are being taken that i hope will help stabilize that situation. in the emerging markets, you have a variety of different stories. the fundamentals in the emerging markets are pretty good. even if there is moderation of growth in some countries, we are seeing overall a remarkable transformation of places like china and india, which has been the biggest anti-poverty program in history. the growth in those countries has lifted many millions of people out of poverty. the growth will proceed in those areas as well. with each country, each region -- latin america, asia, dealing
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with different sets of issues. >> i know the our audience has many questions to pose to you. given all of the range of things that we have already discussed, are there 1 or two particular things and keep you up at night? >[laughter] >> we have a dog that is big that sleeps with us. [laughter] i tried to get as much sleep as possible. it did not work out today because the airline canceled, and it's a long story. i want to see our economy recover. i like to see a stronger labor
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market, fiscal policy address the issue that i mentioned. -- issues that i mentioned. i think that things are moving in the right direction. i am cautiously optimistic about the next couple of years. >> thank you. [applause] i am sure there are a great many questions that have already been shared with our presenters. let me turn the floor to them. >> i master student -- am a master's student. if treasury had mentored a trillion dollars and platinum coin, with the fed have accepted it -- minted a trillion dollar
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platinum coin, with the fed have accepted it, and what would it mean going forward? >> i am not going to give that any oxygen. [laughter] the treasury and federal reserve over the weekend -- the treasury issued a statement that the federal reserve approved, stating that we did not think this was the right way to deal with this problem. there are legal issues, policy issues. the right way to deal with this problem is for congress to do what it is supposed to do and authorize an increase in the debt ceiling so we can pay our debts. i think that is what will eventually happen. i do not think the going often the other direction would be that helpful. >> -- that going off in the other direction would be that
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helpful. >> i am a second year at the board's school. does the debt ceiling still have a practical purpose? could it be eliminated without much consequence? >> it has got symbolic value. maybe one or two other countries, but essentially no other countries and the world have this particular institution. the congress appropriates $100, tells the government to spend $100 on whatever, and then it raises $80 in revenue through its tax code. the arithmetic here says, you have to borrow $20. no, congress has to give a third
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100-80 = says the 180at 20. logically, there is got to be something to make up the difference. the way to address it is by having a sensible plan for spending, insensible span foplar revenue. as i was saying before, this is like a family saying, we're spending too much. let's stop paying our credit card bill. that is not the way to get yourself in good financial condition. it would be a good thing if we did not have it. i did nothing that is going to happen. -- i do not think that is going to happen. i hope congress will allow the
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government to pay its bills, not raise the possibility of default. and address the very seriously these fiscal issues. there are lot of important issues, a basic fundamental values involved. let's do that. we do not need to do it in the context of the debt ceiling. >> do you believe that the fed should actively prevent future ?sset bubbles wha >> they're difficult to anticipate. we can do some things. we can try to strengthen our financial system. because the commission earlier,
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by increasing the amount of capital and liquidity, improving supervision of those banks, making sure every important financial institution is supervised by somebody. you make the system stronger, then a bubble or some other financial problem emerges, the system will be better able to be more resilient. you can try to identify bubbles. the rest and a lot of research on that. -- there's been a lot of research on that. the financial stability oversight council is made up of 10 regulators and chaired by the secretary of the treasury. one of whose responsibilities is to monitor the financial system, as the fed does, and tried to identify problems -- tried to
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identify problems that emerged. you're not going to identify every possible problem for sure. you can do your best and try to make sure the system is strong. when you identify problems, the first line of defense needs to be regulatory and supervisory authorities. not only the fed, but other organizations like the occ and fdic have as well. you can address these problems using regulatory and supervisory authorities. there is a lot of disagreement about what role monetary policy plays in creating acid bubbles. it is not a settled issue. there's some people -- asset bubbles. it is not a settled issue. we need to be open-minded about it and pay attention to what is
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happening. the federal reserve was created about 100 years ago. 1913 was the law. not to do monitor policy, but to address financial panics -- monetary policy, but to address financial panics. it is a difficult task. going forward, the fed needs to think about financial stability and monetary economic stability as being the two key pillars of what the central bank tries to do. we will be using our regulatory, supervisory powers. if necessary, we will address monetary policy as well. i do not think that is the first line of defense.
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>> this question comes from twitter. since the fed declared it was targeting it to% inflation rate in january 2012, the fomc released its projections five times. each one of these projections, the inflation rate has come in below the started. why then has the policy been sent to consistently undershoot the target. ? >> was that 140 characters? [laughter] >> i suspect many in our audience had related questions. >> wheas i said earlier, when dean collins was asking me about the risks of some of our policies, i was pointing out that inflation is very low.
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it is below the 2% target. unemployment is above where it should be. there seems to be this strong presumption that we should be aggressive and monetary policy. that does make the case for being aggressive, which we're trying to do. the additional point i made was that the short-term interest rate is close to zero. we are now in the world of nonstandard mentor policies. -- monitor policies. -- monetary policies. we have to pay close attention to the costs and risks of these non standard policies, as well as potential economic benefits. to the extent there are costs and risks associated with non standard policies, economics tells you when something is more
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costly, you do less of it. we are being bred accommodative, working very hard to try it -- we are trying to be accommodative. in trying to think about what the right policy is, we have to think not only about the macroeconomic outlook, but the costs and risks associated with the individual policies we might apply. but >> i like to follow-up on that question. when of the things you mentioned earlier that is in the toolkit is the way that the fed explains its policy to the public. first there was a number of announcements that set dates for how long interest rates would remain low. more recently, the move to making it conditional on performance.
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a variety of changes such as more information in the minutes , about the kind of information or kind of discussion that has happened at the fed. i wonder whether that increase information about what the fed is thinking, you see as helping to be more effective, or perhaps complicating the message? >> that is to some extent of to the auditors. to determine whether they think it is -- up to the auditors. , to determine whether the and it is helpful or not. -- whether it is helpful or not. to try to convey to the markets when we thought short-term interest rates might start to rise, initially we gave it date. that was our best guess. we change that date a couple of
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times. -- changed that date a couple of times. instead of talking about a date, which is in on transparent way to explain -- a non-transparent way to explain what you're doing, instead, what we have our recento in arbo evolution is to explain what will be looking for in terms of unemployment, inflation, before we begin the process of raising interest rates. that is much more transparent and helps people understand what our thinking is. if the outlook changes, suppose that's a really good news comes then -- that some really good news comes in -- if we were using the date, people would not know how to adjust that.
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if we're using these guides posts in terms of inflation, unemployment, the investors in the market can say, the date were get to 6.5% unemployment seems to be closer than we thought, and that would allow us to change our estimate of when the fed is going to respond. that should allow greater clarity about how policy will evolve over time. that is our goal. we have worked as a committee. it is not easy to work with 19 people, all from have strong opinions. -- all of whom have strong opinions. each individual change can be debated. if you look of the broad sweep of what we have accomplished in the last 15 years in terms of
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communication has been enormous change. we're much more transparent condi easy to understand then would have been the case -- and easy to understand then would have been the case 15, 20 years ago. what is one aspect of financial policy that you think needs reform that is not currently being discussed in the media? >> the main area that has been put aside for the time being is government sponsored enterprises, fannie mae and freddie mac. there were taken into receivership at the beginning of the crisis because of the losses they suffered on mortgages and their low levels of capital.
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there's a pretty widespread agreement in washington that reform is needed for those institutions. the treasury has put out some alternative suggestions. other suggestions have been made by members of congress. so far, not much progress has been made. that is one pretty obvious area that needs to be addressed. i would say that the dodd-frank bill is very broad and has covered many of the major parts .f the financial system pr >> how do you respond to the people who question the constitutionality of the federal reserve and would like to severely weaken it, and members of congress who wish to audit the fed? >> i am not a lawyer. i do know article one, section
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-- never mind. [laughter] so far, no one has had a supreme court case. the fed performs a critical role of managing the monetary system. let me talk about the other issue, which is more substantive. their bills in congress that would "audit the fed." it sounds like something -- how can anybody object to auditing the fed? the trouble with audit the fed is that is not what it is about. it is a misnomer. the fed's books are completely audited. we are audited first by an outside, private-sector accounting firm.
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secondly, all of our books, to thehing is open toda government accountability office. but also have an independent inspector general. -- we also have an independent inspector general that is able to abide wait any aspect of the fed's financials or activities -- audit any aspect of the fed's financials or activities. all of our to the t's are thoroughly audited. -- activities are thoroughly audited, with one exception. with the law that created they gao, there is an exception to
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monetary policy. gao cannot go in an audit in monetary policy decision. -- audit a monetary policy decision. if the audit the fed bill passed, a congressman who did not like the latest interest- rate move could say, gao, go an audit that. the gao would send its staff and to the federal reserve to say, why did you rise in interest rates? that is the first step for the federal reserve no longer being an independent central bank. there is strong agreement around the world that if you want monetary policy based on long- term considerations and not on short-term political consideration, the central bank needs to have some independence in making the trip policy.
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this bill would strike at the heart of this independence. it is my opinion that many people who support the bill think it means what it sounds like, something about the financials. it has to do with whether or not congress can pass the gao to investigate a decision by the fed that it does not like. if you want a healthy economy, you want to have a strong and independent central bank, and that is not consistent with that bill. >> do you get any information from the vibrant discussions on social media? >> i read blogs. 140 per characters limits the
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discussion on twitter. -- 140 characters limits the discussion on twitter. [laughter] blogs have become an important source of intellectual exchange. lins will remember this. it used to be that if you were an academic and you wrote a paper, you had to submit to a journal and it took a few years and it got published. it was three years after you wrote the paper before anybody knew what to were working on. and then came the internet -- you were working on. and then can the internet. papers were available almost immediately -- came the internet. papers were available almost immediately. the long delay in writing and doing the research, what if you
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had a shorter idea you wanted to put out there? the internet has provided useful ways for people to communicate, to discuss interesting ideas. a fall in love of baseball -- i follow a lot of baseball blogs. it trades discussion among people, which is constructive. discussion among people, which is constructive. we have facebook, we have twitter. we're moving along here. we're still little bit old- fashioned. the social media does provide a convenient way to communicate quickly to a group of people and
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keep track of what is going on. i think there is some positive developments there. >> perhaps we should encourage you to follow the tigers. [laughter] we are out of time. i would like to thank all of you in the room and on line for joining us into a's conversation. you can find information on teacher policy talks on our web site? >> twitter site. -- and our twitter site. charimanirman, thank you for jog us today. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013]
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>> we will have live coverage from northeast washington, d.c. president obama and his family will be volunteering their on this day of service ahead of the swearing in ceremony of his second term. the president will be at the school to paint murals and help prepare. -- repair. first lady michelle obama at the elementary school inaugural ball. the official swearing-in at around noon. before the public swearing-in that happens on monday, along with the capitol lunch and a parade down pennsylvania avenue. all of that happening monday. starting at 7:00 a.m. eastern. the public inauguration ceremony, that will be held on
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the capital said. that they happens to be martin luther king, the holiday that celebrates his legacy. the senate historian gave a historical perspective. health varioust variou presidents treat the de. >>-- the various ways presidents treat the day. >> the constitution rights of the oath of office. -- rights out the oath of office. -- writes out the oath of office. most presidents say, "so help me god." there was a tradition, a folklore that developed that washington said, "so help me god."
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we as historians have been looking for any possible resource. we're not sure about this. one of the accounts was given to us by washington irving. he gave his ramparts that washington said, -- rememberance that washington said, "so help me god." most presidents in the 19th century did not repeat the oath of office. they just said, " i do," at the end of the oath. ,tarting about the 1880's presidents began to say, "so help me god." the chief justice who swears the men inevitably says -- them in inevitably says, "so help me god." it has become tradition.
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tradition is much more important than even constitutional structure in this process. >> you can watch that conversation in its entirety. online to c-span.org. the official swearing-in ceremony sunday. we will have a live starting at 10:30 a.m. in public swearing-in festivities happening on monday. c-span live coverage starting at 7:00 a.m. on monday. the president is expected at a northeast washington, d.c. elementary school. he and his family will be volunteering on this day of service. we're going to take a look at new york senator charles schumer.
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>> what are the hardest parts of your job right now? >> trying to make sure that everybody gets to their places. as you know, there was a big problem four years ago. we're trying to deal with these huge numbers of people. .e're using an iphones app whoever gets a ticket will have a gps-related iphones app, telling them the best route to get to their seat. last time people waited in line for hours and when they were at the gate, they were told they were at the wrong one. we're building temporary sulfone
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towers. -- cell phone towers. we have hundreds of volunteers who will be scattered not only at the mall, but a mile or two from it. >> over 49,000 facebook fans. >> we're using lots of social media. there's a lot of excitement. every senator gets a certain number of tickets. i put most of mine up for a lottery. tens of thousands of people applied to the lottery. >> it will be much of the largest ever. -- one of the largest ever. >> take us through the day.
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>> i wake up early. then i get in a car and go over to the white house, where the president and mrs. obama and my wife and i and the other four of of the inaugural committee have tea. it is a tradition. then we wait in a room, where we will serve new york style greek yogurt to people. then we marched on the platform and have the ceremony. >> what is the most meaningful thing you are looking for? >> -- forward to? >> and think of election day, when you go run to the polling places in the evening. there are lot of people who are tired. they want to get home.
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feed the kids, do the chores, watch tv. they stand in quiet dignity and going to the polling place. the next morning, we all abide by the result. i cannot recall a demo the day after. this ceremony signifies that peaceful passing of power. it should give you faith in america. the team we have chosen is, faith in the future of america. the symbol of this inauguration is the completion of the capitol dome. in two years earlier, when lincoln became president, the dome was have finished, and it was an eyesore.
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the conventional wisdom, awe cannot finish this. to lincoln, the half finished dome symbolized a hal divided nation. it is a symbol that we can do a lot in this country. >> after the ceremony, the luncheon -- you mentioned new york food. how have you inserted new york into this experience? what will you be doing with the president and first lady? >> will serve a white wine from the finger lakes and a red wine from long island. both are worth winning. -- award-winning.
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losi, andpaul peo others did the tasting. we have cheese, new york. apple cobbler is made from apples from columbia county. the chef was trained in dutchess county. there is maple syrup that is part of the sauces that is from dutchess county as well. they serve some honey as well. from a.ing to serve it -- an apiary. a young woman started to have a business that was booming. it was wiped out by hurricane sandy. we got the honey from rochester. >> how did you get into this position your in as the chairman
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of the committee? >> i am chairman of the rules committee. there is the logistical part, there is the large part, and then i give the second longest speech after the president. i had to write it, hold it, prepare for. -- hone it, prepare for it. >> what do you hope to convey an? >> faith in america's futures. course we are here at the national mall, a tent dedicated to the day of service. -- >> we are here at the national mall, a tent dedicated to the of service. as we're here at the red cross area. they're holding cpr demonstrations.
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shortly will be taking you to present obama and his family. let's take a listen to what is happening here at the national mall. whenever we do some pressure, we're going to put it in the middle and do this. clerks you want to be over the bod >> do want to be over the body. -- you want to be over the body. does anyone know why? [inaudible] but right. -- you're right. whenever we push back, we're going to open it up.
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is enough. -- easy enough. why don't two of you try it? why don't we all put our gloves on. a little bit. they come in all different sizes. -- big. they come in all different sizes. okay, so you got your glvoes on. -- gloves on. you're going to want to move into position. effectively, you want to use this part. you want to be over. you want to go 30. you can sing, "staying alive."
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do you guys know that song? that is the song that can help you make sure. i will counted on for you in. -- count it out for you. let's put those on too. [indiscernible] that's exactly right. there we go. put your hands in that position.
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perfect. [counting] 30. pushed ahead back. -- push the head back. you're doing well. here and here. with this hand, hold the nose. there you go. yeah, exactly. [indiscernible] yeah, exactly. one more time. each of you do one more set. are you going to be a doctor? you've got all the answers.
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>> okay. >> [counting] excellent. perfect. good. you keep doing that until someone tries to help out. it gets really tiring. [indiscernible]
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i'm going to move this for you. you would never move a real body. you are going to want to get over. there you go. okay. really hard, okay? make it click. can you hear it click? perfect. [counting] are we ready to try it for real? thirty of those, and how many breaths? >> two. >> [counting]
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okay. keep going. keep going. got to keep going. >> getting a cpr listen with some of the kids of visiting the red cross tent in the national mall. this tent is dedicated to the day of service. the red cross looking for volunteers and looking to teach people about ways to help out in their community. we're waiting to take you live to president obama. he and his family are at an elementary school in northeast d.c.
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they're going to be painting murals and doing repairs. while we wait to take you to the elementary school, and we're also going to be visiting with first lady michelle obama and their children. they will be at the kids inaugural ball later on this afternoon. check ino going to with vice president biden during the day, during his volunteer service as well. it was president clinton who actually started the immelt service.day as a day of the chelsea clinton kicked off all of the events happening at the national mall today. we have a lot of resources on line for you to see the inauguration this weekend. we will have a special video feeds and behind-the-scenes photos. c-span.org.
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>> that is exactly right. putting oxygen in here. until someone else arrives. [indiscernible] >> we have first aid kits, survival kits. we of first aid for cats and dogs. we have a swimming clauses. -- swimming classes. sign up for anything that you want.
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>> thank you very much. >> those of you more interested, -- whoa r are interested, go to the mannequin over there. learn how to save a life. thank you very much. [indiscernible]
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>> straight up and over. [indiscernible] >> getting a lesson in cpr at the national mall at the red cross both. this is a national day of service. we're looking at this while we wait to take you to an elementary school in northeast d.c. president obama and his family will be volunteering theire ahed of his swearing-in ceremony for his second term. it will be happening on monday. let's take a look at some of the history behind presidential
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inauguration. >> we now have coverage of president obama performing his volunteer duty from the state at service. we are taking you to northeast d.c.. >> that was a good one. [indiscernible]
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[indiscernible]
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>> just taking a look at president obama, some of his volunteer work for the day along with his wife michelle, the first lady. they were in northeast washington d.c., all part of this day of service that is happening on the national mall and around washington. over the weekend we will have the official swearing-in ceremony on sunday -- the inaugural ceremony. we will start live coverage at 10:30. on monday, the public swearing- in and luncheon at the capitol. that is starting at 7:00 a.m.
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eastern. live coverage here on c-span. next we are going to take a look at richard fisher. he talks about banks and the economy. he says "too big to fail remains a threat." he served as special assistant to the treasury secretary in the carter administration. this is about 50 minutes. [laughter] >> one of the more unusual introductions i have received. john is a descendant of the iconic patriot patrick henry. we are mostly anti-crown.
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i asked him why it was patrick henry was the most outspoken. his answer was incredibly candid. richard said it was because he was poor. how of reports he may have been, patrick henry was a very rich order in one of his speeches. "different men often see different subjects in different lights. i shall speak forth my sediments freely and without reserve." patrick henry was addressing the oppression by the british crown. tonight i wish to speak to a different kind of repression, the injustice of being held hostage to large financial institutions considered too big to fail. to fail.

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